Travel Leaders Corporate has released some positive data showing that the domestic business travel sector has rebounded from the recession. According to the company's aggregated second quarter client booking data for 2015, average trip spending has been on the rise for the eighth consecutive quarter.
Domestic hotel and airfare costs continue their upward trajectories; however, the same can’t be said for rental cars, which continue to decline in base price.
Travel Leaders said that the biggest pointer to the strength of business travel, however, is the rise in average trip length to more than three days and an increase in last-minute airline bookings. In the second quarter, 27 percent of tickets purchased were less than six days from the departure date. With costs continuing to rise in most segments of travel, rental cars are bucking the trend, with domestic base rates 7 percent lower than second quarter of last year.
“Based on our data, we are very pleased to see overall business travel rebounding at home, as it’s a key indicator of the overall health of our domestic economy,” said David Holyoke, president of Travel Leaders Corporate. “As for international business travel, the data shows it is stagnant and clearly is impacted by the ongoing uncertainties surrounding the Eurozone, as well as the strength of the dollar.”
Based on Travel Leaders Corporate’s client data, the total base cost of a domestic trip (combining air, hotel and car) is up 6 percent over first and second quarter last year, and the average overall domestic trip cost has been increasing for eight consecutive quarters. The average trip length for domestic business travel has been increasing steadily, too, compared to the last three consecutive quarters; it now averages over three days per trip, which is a year over year increase of 14 percent. The trends are slightly different for international business travel, however, which saw a decline of 6 percent between fourth quarter last year and the first quarter of 2015, then remained flat for the second quarter.
The newly released data show a steady pattern for the cost of domestic airfares, which continues to see a peak in the second quarter each year, when business travel is at its busiest, and a decline in the fourth quarter. Average hotel nightly rates show a similar pattern. But unlike airfares, which are down 3 percent over the previous year, hotel rates continue to climb and are up over 2 percent from second quarter in 2014.
“There are several factors that might be impacting base rental car rates,” said Holyoke. “First is industry consolidation, there are fewer rental car companies these days which is leading to more direct competition for market share. Second, we’ve seen new taxes and fees all over the country levied on travelers to pay for things like stadiums. These costs could be leading rental car companies to lower base rates in order to maintain a competitive total cost.”
Interestingly, the advanced purchase window for airline tickets continues to shrink, which may also point to positive overall economic health, Travel Leaders said. In 2012, only 23 percent of Travel Leaders Corporate’s clients purchased airline tickets less than six days prior to departure, today that percentage stands at 27 percent. Tickets on average are 25 percent less expensive if purchased seven or more days in advance, and about 30 percent less expensive if purchased 14 or more days in advance. The trend in a shorter booking window for airline tickets – and thus higher costs for airfares – shows that price is less of a factor in the decision-making process for those business travel clients.